A Trade Agenda that Gets Results

Transcription

1 A Trade Agenda that Gets Results Annex to the Canadian Chamber of Commerce Election Platform June 2015 A Trade Agenda that Gets Results The Canadian Chamber of Commerce 1

2 Canada s next government should take bold action on trade Most Canadians are heading to the polls this year with one thing on their mind: the economy. New headwinds are threatening the growth that until recently made Canada the envy of other G7 countries. Trade can be the engine that powers us through these difficult times, but many of our competitors are thinking the same. Canada is pursuing an aggressive trade agenda. We must follow-through and choose our next steps wisely. To complement and expand on the Canadian Chamber of Commerce s election platform A Canada that Wins 1 Canadian Chamber s International Affairs Committee has developed specific recommendations to boost Canada s competitiveness in international markets: Take down barriers to foreign markets Create more regulatory alignment with our trading partners Facilitate the movement of goods, people and data across our borders Enhance in-market support to promote exports and attract foreign investment Background As a small open economy, Canada s high living standards have always depended on international trade. Exports, imports and foreign investment create and sustain jobs in our communities, stimulate competition and innovation and give families affordable choices in the marketplace. Today, trade matters more than ever. High consumer debt and a cooler housing market are holding back domestic spending. Oil prices are down. If Canadian exports fail to plug the gap, our economy will take a big hit. We are starting from a position of weakness. Canada has fewer international companies today than before the global financial crisis. We sell only 40% more goods and services abroad than we did 10 years ago, while the United States and Australia have more or less doubled their exports over the same period. 2 Canadian business remains stubbornly concentrated in mature markets with low growth rates, and the shares of Canada s foreign investment going to developing countries in Asia and Africa, for instance, ranks far behind other G7 countries. 3 To reverse such trends, companies will have to work harder to expand international sales and take advantage of foreign technologies, skill sets and cost advantages. But they also need to have the right public policies in place, both at home and abroad. Canada has made notable progress with new free trade agreements and commitments to enhance trade promotion activities. We need to build on these initiatives, set our sights even higher and take a comprehensive approach to help our businesses win in a rapidly changing global economy. 1 Forthcoming, May 26, World Trade Organization. 3 United Nations Conference on Trade and Development. A Trade Agenda that Gets Results The Canadian Chamber of Commerce 1

3 1. Opening Markets Canadian companies continue to deal with a wide range of trade barriers in foreign markets: high tariffs and quotas, regulatory discrepancies, subsidized competitors, tax disadvantages, undervalued currencies, local content rules and poor protection of physical and intellectual property. Service providers face ownership restrictions and often find they cannot get their credentials and expertise recognized. By legally binding our trading partners to eliminate or reduce these barriers, free trade agreements can make a big difference. Not all agreements are created equal, however. For business to get full value out of them, they should provide comprehensive market access for goods and services, realistic rules of origin and meaningful disciplines on labour mobility, intellectual property, investment protection, e-commerce, regulatory cooperation and trade facilitation all backed by timely and effective dispute settlement. Pending trade agreements GDP gains (est.) Export gains (est.) Canada-Europe Comprehensive Economic and Trade Agreement 8.2 billion 8.5 billion Trans-Pacific Partnership US$9.9 billion US$15.7 billion Canada-Japan Economic Partnership Agreement US$3.8 billion US$7.1 billion Canada-India Comprehensive Economic Partnership Agreement US$6.2 billion US$1.4 billion Source: Government of Canada, Peterson Institute for International Economics. Implement Canada s free trade agreement with the European Union, conclude the Trans-Pacific Partnership and make progress on bilateral negotiations with Japan and India Conduct detailed studies on the costs and benefits of free trade agreements with China and Southeast Asian markets Negotiate foreign investment protection agreements with current and future destinations for Canadian capital Pursue a compromise at the World Trade Organization to reset the multilateral trade agenda, while pushing forward plurilateral negotiations on services, information technology and environmental products A Trade Agenda that Gets Results The Canadian Chamber of Commerce 2

4 Regulatory barriers can make or break entire industries Over the past decade, Canada s canola farmers, processors and exporters have capitalized on advances in plant science and growing demand in Asia to become an industry that contributes nearly $20 billion a year to the national economy. Hoping to replicate this success with soybeans and corn, seed developers plan to invest hundreds of millions of dollars over the next 10 years to expand the production of these crops by eight to 10 million acres. But the long-term potential of these industries depends on overcoming regulatory barriers in their primary market. Today, China imports one third of Canadian canola production. In just over two years, soybean sales to China have grown from zero to almost half a billion dollars. Recently, securing marketing approvals for biotech crops in China has become challenging. In-country field trials are being delayed, approval criteria have become murkier and the overall regulatory review period is longer and more unpredictable. As a result, new high-yield seed varieties are often stuck in limbo and are unavailable to Canadian farmers. Source: Canola Council of Canada, Croplife Canada, industry sources. 2. Trading in Harmony Doing business abroad means Canadian companies need to certify their products and operations under a number of regulations and standards. Good regulation is a force for competitiveness. However, different countries tend to have different rules, even when they seek to achieve the same sorts of health, safety, environmental or consumer outcomes. The resulting uncertainty, costs and delays impose a major burden on our companies and a disincentive to growing markets abroad. Over half of all Canadian small and medium-sized exporters in the manufacturing sector, for instance, say this is one of their top barriers to international expansion. 4 Free trade agreements have a weak record of overcoming regulatory barriers, since they typically lack binding commitments in this area. Canada needs to refine its approach and make better use of alternatives. Develop a inter-department regulatory cooperation strategy that will mobilize government resources and political attention to disseminate Canadian best practices and align domestic regulation with key trading partners Work closely with individual businesses to set targets and track outcomes in ongoing regulatory cooperation initiatives, notably the Canada-U.S. Regulatory Cooperation Council and sectorspecific mechanisms with countries like China, India and the European Union A Trade Agenda that Gets Results The Canadian Chamber of Commerce 3

5 3. Facilitating Trade Successful international companies are integrated with global value chains that span multiple jurisdictions and suppliers so they need to be able to get products, people and data in and out of Canada easily. It is increasingly important to put in place low-cost, timely and straightforward customs and immigration services as well as policies that allow firms to transmit and store business information across their global operations. Improve the transparency, predictability and consistency of customs requirements Align customs procedures to reflect the specific risk levels of shippers and goods, expediting repeat users and low-value transactions Urgently implement planned programs to streamline customs procedures and make better use of information technologies, including those under the Canada-U.S. Beyond the Border initiative Make further reforms to Canada s tariff regime to simplify and better target import duties, reducing resource demands on customs officials and shippers Import and visa bottlenecks are hurting trade Businesses surveyed for the World Economic Forum s 2014 Trade Enabling Index identified tariffs and burdensome import processes as the top barriers to getting products into Canada. Out of the 138 countries assessed, Canada ranked poorly on measures of tariff complexity (97 th ), cost to import (95 th ), time predictability of import procedures (48 th ) and number of days to import (28 th ). It can be just as hard to bring in foreign employees and business people. Since 2004, the average visa processing time for visitors has quadrupled to 21 days. Compared to Australia and the European Union, Canada has fewer visa-free arrangements with its trading partners and a significantly lower approval rate for applications. Business travel to Canada dropped by 6% between 2010 and Source: World Economic Forum, Tourism Industry Association of Canada Clarify requirements, reduce application fees and lower processing times for business and tourist visas Ensure companies are freely able to move and store data across borders for business purposes 4 Office of the Chief Economist, DFATD. A Trade Agenda that Gets Results The Canadian Chamber of Commerce 4

6 4. Promoting Trade and Investment An ambitious trade agenda is about more than just taking down barriers. Even when the door is open, companies have to find appropriate suppliers and distributors, access capital, navigate red tape and manage risks all in a new political, cultural and legal landscape. The hurdles are even higher in emerging markets, where institutions are less developed and local governments play a more active role in the economy. Countries around the world are investing in new tools and expanding diplomatic support to help their companies win contracts, secure partnerships and attract foreign investment. Canada must do the same. Strengthen Canada s diplomatic presence abroad and expand resources and training programs for the Trade Commissioner Service Create a one-stop-shop for companies to access federal and provincial trade support programs and learning resources, including customized business leads and information on regulatory and import requirements Appoint a Trade Ambassador that will coordinate federal and provincial trade delegations and provide targeted political support for strategic projects and foreign investments Establish a national development finance institution to help Canadian businesses deploy their technologies, expertise and capital in emerging and frontier markets Invest in a comprehensive national branding program that brings together existing efforts, targets new products and markets, and boosts the profile of Canadian business in priority countries I ve come to the conclusion that the support that the government is able to provide through its trade initiatives has not kept pace with the changing face of global Canadian businesses. Canadian staff on the ground around the world quite often have a difficult time wrapping their minds around how to help a company like ours, whereas the trade resources in countries like the United Kingdom often seem better equipped to support us. Canadian trade officials should treat businesses, such as Aimia as the customer. Provide us with one relationship manager who is equipped to lead us through the various services the federal government offers and who can help us expand internationally. Rupert Duchesne, Group Chief Executive, Aimia A Trade Agenda that Gets Results The Canadian Chamber of Commerce 5

7 For more information, please contact: Cam Vidler Director, International Policy (230)